Facebook haunted by mild-mannered specter

Greenspan persists with claims as site's originator; no remedy to silence him

By

JohnLetzing

SAN FRANCISCO (MarketWatch) -- Aaron Greenspan, an amiable young entrepreneur, toils a mere 15-minute walk south of the Palo Alto, Calif., offices of Facebook Inc., where he's forging something of a cottage industry out of needling the current darling of Silicon Valley.

Facebook, a relatively new social-networking site, has nonetheless been valued at $15 billion by investors. The site drew 123.9 million unique visitors in May -- more than twice the number drawn in the same month a year earlier, according to comScore Inc.

In addition, Facebook recently closed the door on years of troublesome litigation with the founders of ConnectU Inc., who unsuccessfully claimed that Chief Executive Mark Zuckerberg stole their ideas and code.

Greenspan, who presents similar claims to have had an uncredited role in Facebook's origins, said he has no intention of suing the company. He has, however, plunged into a quixotic and surprisingly adept legal effort to challenge the company's registered trademark. In addition, he's using the experience of publicly criticizing Facebook to inform his own startup.

Greenspan presents a different and potentially more aggravating sort of challenge for Facebook than the founders of ConnectU, who have been legally barred from disparaging the company, according to terms of a settlement. That's because although Greenspan too has garnered media attention blemishing Facebook and Zuckerberg's image, no direct legal remedies are available to silence him.

For example, Greenspan said that he's distributed roughly half of the initial 1,000 copies of his book "Authoritas" in its first month of availability. The book is a recounting of his time at Harvard University as a contemporary of Zuckerberg -- and of "how he invented the Facebook," according to his Web site.

While Greenspan, 25, wades into a particularly nuanced corner of the law to pursue the trademark case, he is also using the challenges encountered in distributing his tell-all book to develop his startup, which he says will be aimed at business customers.

"I learned a lot in this process ... about distribution channels and the existing ways manufactured products get to market," Greenspan said. The startup is an evolution of Think Computer Corp., a business Greenspan originally hatched as a teenager. It will provide Web-based logistics, contact management and -- of course -- social networking, he added.

But for a frenetic young entrepreneur known only as Facebook's most vocal antagonist, navigating the local venture-capitalist scene in an effort to secure funding has been tricky. "When they hear it's a 10-year-old, one-person startup, that's when they get confused," Greenspan said. "I'm always talking to investors, but they're always not sure what to make of me."

'Rather uncommon'

Pressing for the cancellation of a trademark is a difficult legal maneuver even for seasoned lawyers, according to Henry Sneath, a patent and trademark attorney with Picadio Sneath Miller & Norton P.C. in Pittsburgh.

Most challenges to trademarks are made soon after they're first issued, Sneath said. In Facebook's case, that was well before Greenspan filed his challenge in April of this year.

While it isn't advisable for a someone who isn't a lawyer to pursue such a case, Sneath added, Greenspan has made an impressive stab at it. "This guy Greenspan is no ordinary pro se petitioner and seems to have expertise in trademark litigation," he commented. "These are difficult issues, so to understand the laws and express them coherently and put together your proof is very hard, while a company like Facebook would have infinite resources to fight it."

'Writing legal documents is kind of like coding.'

Greenspan said that he hasn't consulted lawyers for his dispute with Facebook, though he's had some experience in trademark cases. During his college days, he pursued a similar case against H. Co. Computer Products with assistance from a law firm.

"This time around, I decided that they hadn't done much that I couldn't do myself," he said. "Writing legal documents is kind of like coding."

Greenspan is claiming, among other things, that Facebook committed fraud to obtain its trademark, which in any event is too generic a term to be trademarked. He's also alleging that Facebook was well aware that he himself previously had used the Facebook name before the company's founding.

In a filing in May, Facebook dismissed Greenspan's claims as "legally insufficient." Proceedings in the trademark dispute have been suspended to examine pending motions, according to a July 3 filing. Even if Facebook initially quashes Greenspan's complaint, it could face years of costly appeals, Sneath said.

Greenspan said that he challenged Facebook's trademark only after he attempted to place advertisements for his book via Google Inc.
GOOG, +1.20%
but apparently was told his use of the trademarked term "Facebook" wasn't allowed.

Greenspan also said he believes that Google consulted with Facebook, and that Facebook lobbied the search giant to bar him from using the trademark in its advertisements. A representative for Facebook declined to comment.

Disputes over the use of trademarks in search advertising -- based on the notion that competitors shouldn't be able to buy up another company's trademark to advertise their own services -- are relatively common for Google.

A 'radioactive' entrepreneur

Greenspan first garnered significant attention with a New York Times profile nearly one year ago. Since then, he's lingered a short walk from Facebook's offices near the Stanford University campus, while drawing increasing attention to his book and to the documentation he's posted online to back up its claims.

Most pressing for Greenspan now, he said, is using his experiences trying to get "Authoritas" into bookstores to craft Think Computer Corp. into a company that can solve logistics and shipping problems. "It'll be a comprehensive program that allows businesses to get done what they need to do in a way that doesn't require hiring hordes of programmers," he said, while declining to offer more detail.

Though Greenspan acknowledged he's had difficulty enticing investors, some venture capitalists say his notoriety shouldn't necessarily prove an obstacle. Peter Rip, a general partner with Crosslink Capital in San Francisco, said he's worked with entrepreneurs before who have been considered "radioactive" due to high-profile litigation, albeit with no adverse consequences.

In addition, Rip pointed out that trifling with a local superstar like Facebook shouldn't be a hindrance. "Facebook is an accident of history."

Steve Dow, a general partner with Sevin Rosen Funds in Palo Alto, agreed that Greenspan's profile shouldn't cause him problems. Venture capitalists "fund folks whose prior deals lost millions of dollars," Dow said. "Why would writing a book, even if of a new minted Valley icon, disqualify him?

"If he doesn't get funded," added Dow, "I'm highly confident it will not be because he did a book on Zuckerberg."

Greenspan stressed that not all of "Authoritas" is about Facebook, as much of it deals with his own educational experiences and personal background. Still, the company just down the road is a preoccupation for him, even when discussing ideas for the startup he plans to build independently.

"I tend to work on very big, long-terms ideas, which can be great if you get tons of funding ... like Facebook has," Greenspan said.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.